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GitOps vendor's close echoes wider funding, open-core woes

Score one for IT orgs that rely solely on upstream code, as Flux CD sails on. But Weaveworks' demise points to larger issues for vendor sustainability, especially in open source.

Weaveworks helped invent GitOps, which has become a widely used method for deploying cloud-native apps and infrastructure. But like some other open core vendors before it, it couldn't make the business side work.

The vendor sold a commercial continuous delivery product based on open source Flux CD, a graduated Cloud Native Computing Foundation (CNCF) project. It had been growing revenue and customer numbers over the last year, according to its founder and CEO Alexis Richardson, in a LinkedIn post announcing the closure of the business this week.

"However, this sales growth was lumpy and our cash position, consequently volatile," Richardson wrote in the post. "We needed a partner or investor for long term growth. Finally a very promising M&A process with a larger company fell through at the 11th hour. And so we decided to shut down."

Weaveworks created Flux CD, which was donated to CNCF in 2021. It is credited with coining the term GitOps, a form of declarative deployment for application and infrastructure code where production resources are kept in sync with Git code repositories.

Paul Delory, analyst, GartnerPaul Delory

"The initial definition of 'GitOps' was basically 'how Weaveworks works,'" said Paul Delory, an analyst at Gartner. "They deserve a lot of credit for creating this category. But a good idea doesn't always translate to a viable business model."

Weaveworks' story shares common elements with other tech vendor businesses in the wake of a major decline in venture capital funding beginning in 2022, following a glut of investment during the COVID-19 pandemic. Weaveworks had amassed $61 million in three rounds of investment of $5 million in 2014, $20 million in 2016 and $36 million in 2020, according to Richardson. Tech M&A spending has also declined considerably overall, according to S&P Global.

Donnie Berkholz, founder and chief analyst, Platify InsightsDonnie Berkholz

"Working with venture capital investments encourages startups to invest ahead of revenue so they can grow as quickly as possible, at least until very recently," said Donnie Berkholz, founder and chief analyst at Platify Insights, a tech industry analysis firm. "Consequently, many startups spend money far faster than they earn it, and this is on purpose. However, it means they can rapidly come to an end if they're not able to raise their next funding round or get acquired before they run out of cash."

Open core economics a contributing factor

Weaveworks' shuttering reflects another headwind facing enterprise tech vendors in 2024: the difficulty of building a sustainable commercial business based on freely available open source software, also known as an open-core model. This trend reached a high-profile peak in late 2023 following HashiCorp's decision to shift future releases of its products from a Mozilla open source license to a business source license, citing competition from vendors who took its open source code and didn't contribute back. Open source bellwether Red Hat also changed how it publishes code for its Red Hat Enterprise Linux operating system last year, making it available only to Red Hat customers, who aren't permitted to republish it.

"Building businesses on open source software is one example of a freemium model," Berkholz said. "Vendors need to nail product-market fit not just once but twice. They need a free offering valuable enough to drive user adoption, and they need a paid version with enough compelling features to drive an upgrade."

GitOps, which is mainly focused on Kubernetes-based environments, might have been a particularly difficult market in which to succeed, according to Delory.

"I don't think the GitOps commercial market is all that big to begin with," Delory said. "[Vendors are] trying to sell these products to an engineering team, and an engineering team's first instinct is to build the tools themselves. There's a natural tendency to put the pieces together yourself out of open source components."

Additionally, Weaveworks faced stiff competition in the Argo Project, also a graduated open source CNCF project, which offers a GUI in addition to built-in support for patterns such as progressive delivery. While both projects ranked among the fastest-growing CNCF contributor communities in 2023, Argo had 927 code authors to Flux CD's 188, according to the CNCF 2023 annual report.

"Ironically, Weaveworks may have hastened its own demise by releasing a free GUI [in 2022] for Flux," Delory said. "Before, you had to buy Weaveworks to get a GUI."

A graph from CNCF showing Flux, Argo, and Flagger usage in 2021.
Flux CD and Argo CD were both popular projects among CNCF survey respondents in 2021. But that open source popularity didn't translate into business success for Weaveworks.

Flux CD project sails on

Shortly after its CNCF graduation two years ago, most Flux CD core maintainers worked for Weaveworks, but that has changed. Now only one of the core maintainers is employed there, according to the project's GitHub page.

Enterprises that use Flux CD in Kubernetes platforms include Deutsche Telekom (DT), which built its 5G infrastructure using the project. The head of that project said this week that Weaveworks' fate won't affect him.

"Of course it is always quite challenging to create a sustainable business based on free open source, [though] there are some positive examples -- see eBPF," said Michael Sewera, head of cloud native 5G core DevOps at DT, in an online interview with TechTarget Editorial. "I don't think that there will be any long-term implication as a form of general concern about open source sustainability. ... I think it is more important to create a good solution or platform versus just a good and sustainable company."

They deserve a lot of credit for creating this category. But a good idea doesn't always translate to a viable business model.
Paul DeloryAnalyst, Gartner

Another Flux CD user echoed Sewera's confidence in the project.

"I and many others I've talked to actually want to try to get to contribute more to the project to keep it alive," said Roberth Strand, who used Flux CD as principal cloud engineer at Amesto Fortytwo, a platform engineering service provider based in Bergen, Norway. Now a cloud native manager at Sopra Steria, an IT services and consulting firm in Oslo, Strand said he still expects to use Flux CD while working with clients.

The problem with Weaveworks seemed to have more to do with investment timing than open-core business concerns, Strand said. But he also acknowledged there is sometimes a disconnect between open source ideals and business growth.

"It is mostly us idealists that care about these things, [and] I definitely think there are ways to have vendors dedicated to open source while still making more than enough money," he said. "[But] company size calls for more traditional leaders, who usually don't see the potential in open source software."

The differing fates between Weaveworks and the open source project it started actually serve as an example of why large enterprises might favor an open source project over vendor products in the first place, Berkholz said.

"Flux adopters are protected both by it being open source and also because it's multi-vendor with strong governance in place," Berkholz said. "It should be reassuring in comparison to proprietary software or single-vendor open source."

Beth Pariseau, senior news writer at TechTarget, is an award-winning veteran of IT journalism. She can be reached at [email protected] or on Twitter @PariseauTT.

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